News

Centrica merger stalls

CENTRICA, owner of British Gas, has held talks with the Norwegian utility Norsk Hydro about a merger to create a £19 billion international energy giant.

Sir Roy Gardner, Centrica’s chief executive, is understood to have discussed in detail a nil-premium deal with his Norwegian counterpart, Eivind Reiten.

The negotiations, in which Gardner was advised by Goldman Sachs, are said to have stalled recently after pressure from the Norwegian government, which owns almost 44% of the £11.7 billion Norsk Hydro. Norwegian politicians became nervous about a controversial deal ahead of this year’s parliamentary elections.

The proposed marriage made sense for Centrica because Norsk Hydro is one of Europe’s largest gas producers. Centrica has 11.7m residential gas customers through its British Gas subsidiary, but is worried about having enough gas to supply them in the years ahead.

Britain became a net importer of gas this year, increasing the reliance of UK gas